Why bitcoin, ethereum and dogecoin tumble
What is happening to bitcoin, ethereum and dogecoin cryptocurrencies
The collapse of all major cryptocurrencies is accentuated, after three Chinese financial associations urged financial institutions not to use cryptocurrencies for their transactions, because "they are not real currencies".
The selloff is also favored by fears about inflation, pending the minutes of the last Fed meeting. Right now, bitcoin drops 23.16% to $ 33,285 and brings the May partial to -34%, the worst since November 2018. Ethereum drops 36.31% to $ 2,187.31, ripple loses 32.18% to $ 1.0822, dogecoin drops 37.37% to $ 0.3067, cardano loses 40.70% to $ 1.23.
Bitcoin tumbles after China's central bank crackdown on cryptocurrencies and Tesla's May 12 decision to suspend car purchases by accepting payments with the world's most popular virtual currency. Fears of a surge in inflation are growing.
All the details.
THE COLLAPSE OF THE BITCOIN
Let's start with the thud. Bitcoin hits its lows since February 9, falling below $ 40,000, to an intraday low of $ 38,585.86, for a loss of over 13%, according to CoinDesk data. A collapse that, according to CNBC estimates, has sent up 270 billion dollars. The virtual currency marks less than 39% compared to the all-time record of mid-April at $ 64,829.14.
THE DECISION OF THE CHINESE CENTRAL BANK
Affecting the fall in the price of Bitcoin is the decision of the Central Bank of China to ban financial institutions from providing financial services related to cryptocurrency transactions. In a statement, the three associations China Internet Finance Association, China Banking Association and China Payment and Clearing Association said that cryptocurrencies, "are not supported by real value and their price is extremely easy to manipulate", transactions "are not protected. by the Chinese law ”.
"Recently, cryptocurrency values have skyrocketed and plummeted and speculative trading has resumed, breaking the security of people's property and disrupting the normal economic and financial order," add the three associations.
ELON MUSK'S PROGRAM CHANGES ON THE BITCOIN
Tesla's decision of May 12 not to accept Bitcoin payments for car purchases also affects. This was announced by Tesla's CEO, Elon Musk , who said on Twitter that the electric car company has "suspended purchases of vehicles using bitcoin", worried about "the rapid increase in the use of fossil fuels for the extraction of bitcoin ".
THE PROOF OF WORK IMPACT
What worries Elon Musk, and the entire Bitcoin market, is actually the mechanism known as proof of work, used for cryptocurrency mining, which has a major impact on the climate.
“The Bitcoin market has gone through a difficult week due to growing concerns about the impact that the mechanism known as proof of work, used for cryptocurrency mining, has on the climate. This fact has come under the spotlight due to the tweets of Tesla founder and great advocate of digital assets, Elon Musk, ”commented Lanre Ige and Eliézer Ndinga, Research team of 21Shares in a statement.
"As we have already mentioned in both our Bitcoin and Ethereum handbooks, it is clear that the impact on the environment will continue to be a pressing issue, but efforts are already being made to reduce it, as the transition to the model demonstrates." proof of stake '- which Ethereum is developing – or the increasing use of renewable energies, which currently make up 70% of Bitcoin's energy mix ”.
INFLATION AND INTEREST IN CRYPTOMONETS
Meanwhile, fears of a spike in inflation driven by commodities and a possible squeeze by central banks are also growing. Until now, the rally in Bitcoin and other virtual currencies has been driven by the abundance of liquidity of this period of crisis, while the interest of large investors in electronic currencies has waned in recent weeks.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-bitcoin-ethereum-e-dogecoin-ruzzolano/ on Wed, 19 May 2021 13:54:19 +0000.